Analysis of the Relationship of Institution and Chinese Economic Growth
Abstract
Since reform and opening policy, China has achieved a phenomenal growth record. New institutional economics provides a new perspective about the interpretation of the economic growth. This theory holds that institutional transformation plays a propelling role in promoting Chinese growth. This paper examines the relationship of institution and economic growth, and determine the contribution rate of institution to growth. This article decomposes institution into five indexes, then eliminates the multicollinearity by using PCA. This Paper establishes a regression model of institution, capital and labor, and draw a conclusion that there was a positive correlation between institution and growth, and its contribution accounted for 25.252% by taking the 1998-2013 national data of into model.
Keywords
China, Economic growth, Institution, Principal component analysis, Regression model.
DOI
10.12783/dtssehs/aeme2016/7474
10.12783/dtssehs/aeme2016/7474